USEN CORPORATION

During fiscal 2007, the USEN Group ("the Group") selected core business segments upon which to focus. The objective of the Group medium-term management plan was to set the groundwork for steady business growth going forward into the future. As part of this plan, the Group worked toward establishing stronger financial stability, and reorganized its businesses.

Leading into fiscal 2007, the USEN Group consisted of six major business segments: the Broadcasting business, the Karaoke business, the Broadband & Telecom business, the Media Content business, the Business Systems business, and the Recruitment Consulting & Services business. The popularization of optical fiber in the Japanese market resulted in the dramatic growth of broadband infrastructure, and a pressing need for a broad range of content services. Accordingly, the Group has focused management resources on improving our ability to offer media, platforms, and content, pursuing inter-segment synergies toward our goal of "creating media platforms for the digital network age." At the same time, we have segmented and selected businesses to move the Group away from being an infrastructure provider.

Toward Carrier-Free Content Infrastructure Function Independence

During fiscal 2007, the Group repositioned UCOM Corporation as an affiliate accounted for under the equity method, transferring stock to investment fund company UNISON CAPITAL, Inc. as a means to develop a strategic partnership. Leading up to this organizational change, the Group had functioned as a media platform provider, as well as a provider of related content. The Group had also acted as an independent infrastructure provider to deliver this content and other services. The Group has recognized, however, that this go-it-alone attitude has outlived its usefulness as a corporate policy, judging that moving away from the infrastructure business, and separating out infrastructure functionality is the best policy for building corporate value. One result of this new policy was converting UCOM into an affiliate accounted for under the equity method. Since becoming profitable on a single-month basis in 2004, UCOM has established a corporate structure fully capable of sustaining profitable operations. This reorganization has resulted in more management independence for UCOM, supporting a possible IPO at some point in the future.

Subsequent to this reorganization, UCOM absorbed MEDiA K.K. ("MEDiA"), another consolidated Group subsidiary. The goal behind this merger is to enhance corporate value by offering better total services, taking advantage of the synergies between UCOM’s infrastructure and operational expertise and MEDiA’s sales expertise.

The major result of this corporate restructuring is that the USEN Group is now able to offer content as a carrier-free provider. As such, the Group can create stronger, open relationships with Internet Service Providers and content owners to a degree not possible before.

Stable profitability and enhanced content capacity

The Group has created an environment supporting stable profitability, with a focus on building strength in media and content. First, the Group made a tender offer to purchase shares of BMB Corp. for the purpose of converting the status of BMB to wholly-owned subsidiary. The Group also made ALMEX Inc. a wholly-owned subsidiary through a share exchange. Both of the aforementioned companies are moving to establish a secure position in their respective markets while producing steady profit. The intent behind making these firms wholly-owned subsidiaries is to more effectively use the content owned by these companies, and to reduce operation costs by consolidating business functions. Second, the Group has converted GAGA Communications Inc., a company involved in motion picture distribution/ production, into a wholly-owned Group subsidiary. Given the entrenchment of the broadband environment in today’s society, the Group believes that attractive content will be a major factor in being able to differentiate ourselves in the market. In our judgment, the acquisition/ production of content supported by as many users as possible is important to our business. It is for this reason that we brought in GAGA Communications as a wholly-owned Group subsidiary.

Centralization of Main Office Functions

During fiscal 2007, the Group integrated various offices into a single location in Tokyo Midtown, an area undergoing major redevelopment in central Tokyo. Given the management structure of many of the Group companies, the Group decided to integrate management and corporate resources under one umbrella, creating greater Group efficiencies, as well as reducing Group expenses. We believe that this integration will lead to faster decision-making, greater personnel interchange, and maximized Group synergies.